As Conte Faces Italy Vote, EU Cash Is Key to His Survival

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The promise of a wave of European money could help Italian Prime Minister Giuseppe Conte weather a challenging set of regional elections.

Voters in seven of Italy’s 20 regions, including several dominated by parties in Conte’s coalition, go to the polls Sept. 20 and Sept. 21. Mayoral elections and a nationwide referendum on reducing the number of lawmakers in parliament will be held at the same time.

Tuscany, Marche and Puglia may be the places to watch most closely. They’re all held by the center-left, and if the opposition bloc led by Matteo Salvini of the anti-migrant League is able to flip any of these regions it could make life uncomfortable for Conte.

But it would still make little sense for any of the premier’s allies to pull out of his coalition, just when they are about to get the political boost of a windfall from the European Union.

“This government will stay in power whatever the votes’ outcome,” said Roberto D’Alimonte, a political science professor at Rome’s Luiss University. “If the coalition parties triggered an early general election after the regional vote, they’d lose power and control of the European Union’s recovery fund.”

Some Conte loyalists are more worried about whether the administration can take advantage of the expected cash from the EU than about the vote, according to a senior official familiar with their conversations. If the government is seen as wasting money, or pursuing policies based on party or ministry chiefs’ egos, Italians may turn their backs on the ruling parties for years to come, said the official, who asked not to be named discussing a confidential issue.

The Conte government, struggling to salvage an economy crippled by the coronavirus pandemic, is drawing up projects for Italy’s expected 209 billion-euro ($247 billion) share of the EU’s grants and loans package. The relief funding has become a tug of war, as parties in the coalition led by the anti-establishment Five Star Movement and the center-left Democratic Party lobby for their pet projects.

Resisting Reshuffle

Even if Conte’s job looks safe for the moment, a poor regional showing by coalition allies could lead to increased calls for a limited government reshuffle, which the premier has so far resisted. Some lawmakers from the Democrats, or PD, grumble that their party is too subservient to Five Star, the biggest force in the alliance.

PD leader Nicola Zingaretti on Sept. 13 appealed to his allies and Conte for a “change of pace,” saying the country needs more decisive leadership.

“Enough with the too many ‘ifs,’ the waiting and the delays,” Zingaretti said at a rally in the northern city of Modena. Unlike Conte, Zingaretti may have reason to be impatient: his position as party leader is considered to be at risk if the PD loses badly in the regional votes.

Coalition members may have got the message. Although in many cases the two main parties in Conte’s government back rival candidates in the regional vote, Five Star and the PD have stopped short of criticizing the premier or each other on the campaign trail.

They’re also keenly aware of opinion polls showing that Salvini’s bloc would win an early general election. Even without its center-right allies, the League is polling at around 25% in national surveys, maintaining its position as the country’s most popular party despite a steady slide since its high-water mark in the 2019 European vote.

PD Deputy Secretary Andrea Orlando said a center-left defeat would weaken the government, but he ruled out a collapse. Triggering a government crisis “when we are defining the projects for the European funds would mean imposing ‘hara-kiri’ on the country, not on the center-left or Five Star,” Orlando told newspaper Corriere della Sera on Thursday.

Fewer Seats

A referendum vote in favor of cutting the number of seats in parliament -- a core Five Star policy position -- could also favor keeping the coalition in place, as negotiations on drawing up new constituencies and on electoral reform would make a snap vote impossible. A negative referendum vote, though, could severely destabilize Conte’s government.

Despite volatile politics and budget disputes ahead, investors have signaled they’re sticking with Italy’s debt, reassured by the fiscal and monetary firepower of the EU and the European Central Bank shielding the country’s bond market.

Even Salvini has sought to separate what he hopes is a victory in the regional elections from the fate of Conte’s coalition. The League leader said on RTL radio on Sept. 14 that he hopes the premier will “go home, but not because of the regional elections.”

©2020 Bloomberg L.P.

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